- (1.) THIS appeal by special leave is by the assessee against the judgment of the Kerala High Court : [1980]121ITR817(Ker) , answering the questions of law referred under Section 26(3) of the Gift-tax Act in favour of the Revenue and against the assessee. The questions referred to the High Court were the following (page 818) : (1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the Cutchi Memons settled in Travancore area are governed by the rules of Hindu law not only on matters of succession and inheritance but also on other matters like property rights including joint family property, its distribution according to the rule of survivorship and the right of a son in it by birth ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in upholding the finding of the Appellate Assistant Commissioner that the transaction recorded in the document dated February 11, 1965, is only a partition and not a gift to the extent of the shares allotted to the two sons of the assessee ?
(2.) THE assessee is a Cutchi Memon settled in the erstwhile princely State of Travancore which now forms part of the State of Kerala. The family of the assessee like that of the other Cutchi Memons of Travancore had migrated from Bombay, to which place they came from Sindh after their conversion from Hinduism. The assessee's family is one of the total of 332 families in the whole of Travancore. On February 11, 1965, the assessee and his sons and a daughter (aged 55, 42 and 46 years, respectively), executed a partition deed in respect of certain properties belonging to the family. The Gift-tax Officer took the view that the assessee being a Cutchi Memon, the property belonged to him individually and, therefore, the transaction though described as a partition was in reality a gift by the assessee to his children in the guise of a partition deed. The assessee contended that his family was governed by the principles of Hindu law including the rule of survivorship and as such the transaction was really a partition of the joint family property. The Gift-tax Officer rejected the assessee's contention and assessed the transaction as a gift. The assessee preferred an appeal to the Appellate Assistant Commissioner who allowed that appeal. The Appellate Assistant Commissioner held as under : The next question to be decided is whether in this particular case, the subject-matter of the partition was a part of the coparcenary property of Sri Mohammed Issac or his own separate and self-acquired wealth. On this point, there is very clear evidence in the shape of an actual partition document of Malayalam Era 1095 which involves Mohammed Issac and his three older brothers. It is by means of that partition of family property that the appellant came into possession of most of the lands in dispute in this assessment. There was a very small portion subsequently acquired by Sri Mohammed Issac out of his earnings from the family lands and as these also have been clearly included among the family properties in the partition document it follows that the entire corpus covered by the deed is coparcenary property. It therefore follows that : It will thus be clear that the transaction recorded in the disputed document is, in fact, a partition of joint family property and not a gift by Mohammed Issac to his children.
(3.) THE Gift-tax Officer preferred, an appeal to the Tribunal which was dismissed. The Tribunal upheld the view taken by the Appellate Assistant Commissioner that the rule of survivorship applied to the assessee's family. The Tribunal placed reliance on the decision in Hajee Kameesa Jacob Sait v. Haji Mohammed Kathrimbhai 24 TLR 228, to support the conclusion that the personal law of the assessee's family was Hindu law and that the assessee was governed by the rules of Hindu law including the rule of survivorship in matters relating to property rights and that the application of Hindu law was not confined to the family with regard to succession and inheritance alone.;